by Rona Fischman
Have you seen this form? Did you notice that it is more complicated than it needs to be? Have you ever asked yourself why? The legislature in Maryland is taking a look at their agency disclosure law right now.
I could explain agency pretty easily. In Massachusetts, the form reads:
The form reads:
(Check one) ____The real estate agent listed below, the real estate firm or business listed above and all other affiliated agents have the same relationship with the consumer named herein (seller or buyer agency, not
____Only the real estate agent listed below represents the consumer named in this form (designated
seller or buyer agency). In this situation any firm or business listed above and other agents
affiliated with the firm or business do not represent you and may represent another party in your real
The form means:
No one in the office will be representing the person you may be negotiating against.
An agent in this office is allowed to represent the person you may be negotiating against. (This is called designated buyer or designated seller agency. See the definition on the back.)
The flap in Maryland is because the current disclosure does not include “exclusive buyer agency” or “exclusive seller agency” or “single agency” (where the firm can represent buyers and sellers, but will recuse itself if both parties are in the same transaction.)
John Sullivan, Vice President of Buyer’s Edge Co. writes:
If passed, these changes to the Real Estate Brokers Act … would provide the consumer with all of their agency choices when selling or buying their home…It would be the first of the 50 State agency disclosure statements in the country to provide the consumer with all their agency options including exclusive buyer, exclusive seller and most importantly single agency.”
In Massachusetts, not only is the disclosure overly complicated, but it also does not get seen by consumers in a timely manner. The form reads:
All real estate licensees must present this form to you at the first personal meeting with you to discuss a specific property. The licensee can represent you as the seller (Seller’s Agent) or represent you as the buyer (Buyer’s Agent) and also can assist you as a facilitator.
Did you see it at the first personal meeting?
You know that I think agency matters.
It certainly matters to consumers whether the agent they are talking to has the responsibility to disclose information to the other side of the negotiation or whether that agent has the responsibility to keep that information confidential.
It certainly matters to consumers whether the agent they are talking to has the responsibility to work for the best price and terms for them, or for the person they are negotiating against.
The disclosure Massachusetts disclosure reads:
… The agent owes the buyer undivided loyalty, reasonable care, disclosure, obedience to lawful instruction, confidentiality and accountability, provided, however, that the agent must disclose known material defects in the real estate. The agent must put the buyer’s interests first and negotiate for the best price and terms for their client …
It certainly matters to consumers whether the agent provides required disclosures in a timely manner. A disregard for consumer protection laws is not a good sign for someone who is about to give you advice about a high-stakes financial decision.
John Sullivan takes the problem of agency one step further. He sees lack of representation and buyers taking advice from people who represented sellers as part of the machine that lead to the real estate crisis. He says:
“chronic misunderstandings about agent fiduciary responsibility have contributed to the foreclosure crisis both in Maryland and across the nation” — namely that buyers weren’t given good advice by agents about what they could actually afford, and thus did not have their best interests protected.”
Since I care about this, my eyes are on Maryland.